Financial Analysis on Hospital Productivity

Financial Analysis on Hospital Productivity

Hospitals are in the midst of a period of profound economic crisis, a time when many health care institutions are earning less and their staffs and administrations are feeling insecure about their futures (Sherman, 1990; Clare, Sargent, Rhodes, & Thane, 1995; Cooper & Kaplan, 1991; Wyszewianski, Thomas, & Friedman 1987). As Bard suggests, "the American health care system is facing very critical times. We are closing in on annual expenditures of almost one trillion dollars a year. The system needs direction and effective change" (Bard, 1994, 398). And yet few managers and physicians feel they truly understand this New Economic Order so they are feeling disenchanted and, in a sense, locked out of an industry to which many have devoted their entire lives (Ellis, McGuire, 1996; Long, Chesney, & Fleming, 1989; Young, 1995) . Productivity management is the key element in this discussion.

To come to a closer understanding of that productivity concept, it will be detailed in four main sections. The first section will analyze the growth of prospective payment systems (PPS) and the impact that those systems have on the hospital industry. The second section will provide an analysis of the hospital industry's traditional historical productivity records and suggest those steps necessary to rethink those productivity records. The third section will analyze how traditional conce

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enting Productivity Change Within A Hospital's Departmentalized Operation All healthcare experts agree that one of the major obstacles to instituting programs of productivity enhancement is the highly departmentalized nature of the institution (Canby, 1995; Sherman, 1990; Coulam et al.,1991; Brennan, 1996; Shortell, 1985; 1995; Cleverley, 1990). It is this departmentalization that caused the growth of major hospitals and it is this departmentalization which can cause the downfall of many institutions unwilling to change (Eastaugh, 1985; 1986; 1990). This situation calls for nothing less than a total core change in management philosophy at these institutions. Shortell, in a revealing study on excellence, details the elements of success that many hospitals have in common. Ten characteristics of high-performing healthcare organizations are identified. These include a willingness and ability to: 1) stretch themselves; 2) maximize learning; 3) take risks; 4) exhibit transforming leadership; 5) exercise a bias for action; 6) create a chemistry among top managers; 7) manage ambiguity and uncertainty; 8) exhibit a "loose coherence;" 9) exhibit a well-defined culture; and 10) reflect a basic spirituality (Shortell, 1985). "High-perfo
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Approximate Word count = 4270
Approximate Pages = 17 (250 words per page)